Sunday, December 28, 2014
5 things to ask an agent
Amit Kumar Roy
I don't think any of us would buy a house in a fraction of second without doing adequate research about various factors. The same with purchasing a car or even a costly electronic item.
However, when it comes to purchasing a life insurance cover, many people end up getting one for every reason barring protection!
We must not forget life insurance products are long term in nature. If you choose the wrong product, you may end up losing a significant chunk of your money.
So don’t be cowed by a seemingly knowledgeable agent or an overbearing uncle. Here are five things to ask before buying a life insurance product.
First, is the product relevant to you? You would have heard or seen many agents flaunting a product which has just been launched. The returns look fabulous and you may also hear half of the country having bought the same in last 10 days. You should still ask how is that product relevant to your earnings, age, lifestyle, investment horizon, coverage, and, most importantly, your financial situation to pay for the premium for full term.
Two, what are the cost of benefits and features? Do not forget the simple fact that nothing comes free! You may end up purchasing a complicated product which may have no relevance to you. It makes sense to note down cost of each feature.
Three, what is the composition and nature of the base product?
Get into the nitty-gritty of the base products — duration, invested amounts and growth opportunity. Check what happens if you fail to pay full term, what the discontinuance clauses are, and so on.
Four, what if your agent quits? A common problem customers face is sellers stopping to work for the company. Understand that when you are purchasing a long term product you must not depend on verbal assurances. You must be able to get your product serviced without the agent’s assistance.
Finally, ask for a financial need analysis. You are buying a financial product of long term. Ask the seller to explain why you need life insurance and whether there are alternate options open to you.
The writer is Chief Distribution Officer, Aegon Religare Life Insurance
(This article was published on December 28, 2014)